SBI Life Insurance Company has taken a headstart over the Life Insurance Corporation of India in finalising its Pension Tatkal scheme on the lines of the Varishta Pension Bima Yojana announced in the Budget for 2003-04. The annuity product will be offered across the nation by the end of May.

In his Budget, Finance Minister Jaswant Singh had said the Life Insurance Corporation of India would launch a Varishta Pension Bima Yojana with an assured 9 per cent annual rate of return. This was to be partly subsidised by the government.

LIC officials said the proposal was still with the Centre, and the product was yet to be filed with the Insurance Regulatory and Development Authority.

SBI Life's product, however, had been cleared by IRDA, said the company's Managing Director and CEO R Krishnamurthy.

"We will launch the immediate annuity product by the end of this month," he said.

The tatkal scheme is aimed at those who have already retired and can a pay lumpsum immediately to receive a monthly pension thereafter. The minimum age has been set at 55 and the maximum at 70.

Although LIC will offer 9 per cent guaranteed returns, Krishnamurthy said, "Our returns can be better than that, depending on how the market performs and how this is reflected in our investments".

SBI Life's Pension Tatkal will offer a minimum guaranteed monthly pension plus a yearly bonus linked to the annual performance of the fund.

"Ours is not a subsidised scheme, but one that offers a combination of a minimum pension and an annual cash bonus," Krishnamurthy pointed out.

The amount will depend on the age of the pensioner and the option he chooses to exercise. The options are a life-long annuity, a monthly family pension, and a monthly amount for a particular number of years. "The final modalities are being worked out," he added.

Unlike the government's product, which will cap the monthly sum at Rs 2,000, SBI Life will not set a ceiling on the amount offered. This will depend on the age of the individual and the amount he invests, Krishnamurthy said.

SBI Life would capitalise on the branches of the State Bank of India, through which monthly payments would be distributed to pensioners across the country, Krishnamurthy said.

"We expect our pension policy to be the key vehicle of growth in 2003-04," he said. SBI Life is a 74:26 joint venture between the SBI and Cardiff SA of France.

Private insurers were disappointed with the government's decision to exclude them from marketing the special pension policy. They saw the move as a means of denying them a level playing field.

At that time, Krishnamurthy had pointed out, "If the government is cross-subsidising the pension product, it should give private players an equal opportunity".